Inside Move: AT&T aims higher

Move made as DOJ grounds bird deal

As regulators sounded the death knell for one media merger last week, another bolted from the starting gate.

The Dept. of Justice nixed the merger of EchoStar and DirecTV on Oct. 31. That was the same day AT&T announced plans to spin off its cable biz in preparation for a mega hook-up with Comcast — a combo that would create the world’s biggest cable company.

According to the spurned satcasters, their merger was a last stand against the unfettered power of AT&T Comcast and other cablers.

A report issued by the U.S. General Accounting Office — also on Oct. 31 — backs a few of EchoStar’s arguments: A third of 3,000 adults GAO surveyed say they’d be more likely to pick a video service that offers Internet access — something the two satcasters say they can’t do unless they merge.

And satellite has much higher penetration (32%) in areas where it offers local service. EchoStar and DirecTV say they can’t provide such service in all local markets unless they merge.

About 86% of U.S. households subscribe to a pay TV service — of those, 78% favor cable and 18% DBS. If it wants to close the gap, satellite will have to think of more creative ways — other than pure heft — to outrun cable.

With News Corp. chairman Rupert Murdoch likely to emerge at the helm of DirecTV, that may well happen.